Banks to Regulate Foreclosure Abuses
Banks To Regulate Their Own Foreclosure Abuses
This should be good: the government has decided the best way to help homeowners hammered by foreclosure mistakes is to let the banks—which were responsible for the shoddy foreclosure errors in the first place—examine their case files and decide how best to fix the situation they created.
This past January, the Office of Comptroller of the Currency (OCC), which supervises all the nation’s banks, shut down their independent foreclosure review after it was revealed that the banks had selected the consultants. The process proved to be taking too long to resolve homeowner’s complaints, so the government decided to reach a $3.6 billion settlement with the banks.
But before the money can be doled out to those who were wronged in the foreclosure crisis, more than four million cases need to be resolved. Instead of doing their jobs, federal regulators are trusting the banks to review the cases for them, including such high profile offenders as Bank of America and Well Fargo.
The worry among housing advocates is that the banks will shortchange homeowners while looking at their earlier mistakes. The whole process has been a slap in the face to homeowners, and a slap on the wrist to the banks. There seems to be zero accountability here. For example, just this week, a Delaware County man was charged in a mortgage fraud conspiracy that netted more than $20 million in fraudulent loan proceeds. But the OCC has promised to check the banks work to make sure things get done right this time. Since the government is in the banks pockets, it seems unlikely they’ll stand up for the country’s homeowners.
Listen to how author and banking expert Don Coker put it when talking about letting the foxes guard the henhouse—in this case the banks looking over their own books:
“I’m going to try that next time someone breaks into my house and starts ripping me off, ‘please, I’d really appreciate it if you didn’t steal so much of my stuff. I’ve been surprised that the government hasn’t thrown homeowners in jail for making the banks look so bad.’ ”
There are two ways you can look at this; one is that the regulators are setting up the banks for failing to comply with the regulators, or the other is that the regulators are either politically motivated or so incredibly stupid that they are outsourcing the investigation of wrongful behavior of the banks to the potential defendants and respondents. The Paulson-Geithner doctrine of keeping the banks safe from collapse still appears to be the guiding force with regulators and law enforcement.
“Why didn’t the government trust the banks a month ago,” asks Coker. “And why are they solely relying on them now? This can’t have a happy ending for homeowners.”